Fitch Ratings has updated Malta’s status from ‘stable’ to ‘positive’, re-affirming the country’s A+ rating. The government of Malta released a statement declaring that this has been the best rank Malta has ever received.
The rating resulted from the following findings:
- The forecasted GDP growth is 5.5% in 2019 and 4.8% in 2020.
- The local real estate shows no signs of further inflation.
- Local banks are writing off bad loans from 7.3% of their books in 2015 to a current 3.3%.
- Resources developed and implemented by the FIAU and MFSA resulted in a surge in enforced administrative penalties.
- The debt-to-GDP ratio has significantly decreased from 2011’s 70%, currently positioned at 46%, and expected to lower to 40.3% by 2020
- Government surplus is predicted to maintain at 1% through 2021.
- The income gained from the Citizenship by Investment scheme will continue to diminish, settling at 0.5% by 2021.
The country was the fastest growing economy in the EU in 2018. Malta is assigned a score equivalent to a rating of ‘AA’ on the Long-Term Foreign-Currency (LT FC) IDR scale by Fitch’s proprietary SRM. Fitch believes that domestic demand fuelled by solid labour market dynamics will drive Malta’s real GDP growth. Investment activity supported by the absorption of EU structural funds is also forecasted to remain high.
Malta also surpasses the ‘A’ median on the World Bank human development and governance indicator. Its euro area membership and institutional strengths support the ratings, with Fitch stating that the country’s institutional powers are “stronger than the majority of A-rated peers.”
Malta must address labour and skills shortages, dropout rates, and gender employment gap to avoid a slowdown in labour productivity and a loss of competitiveness. Overall, Malta is expected to go through sustained high economic growth in the following year.